The news of the outbreak, about eight miles from Wordsworth's cottage at Grasmere, was a further blow to Tony Blair's hopes of keeping May 3 available as the date for the general election. Mr Blair was said to be "bashing the phones" in Downing Street to try to deal with the crisis. But the scale of the epidemic was making the prospect of calling a general election increasingly difficult.

Cases of foot and mouth rose by 47 yesterday to 607. The National Park Authority said the Lake District outbreak, on a farm close to Hardknott Pass, with 2,000 sheep grazing on the open fells stretching from Borrowdale to Ambleside, could not have occurred in a worse place.

The Prime Minister's concessions late last week, after pressure from farmers' leaders in north Cumbria, to cut red tape and increase the money and manpower available to contain the disease, particularly to keep it off the fells, appeared to have come too late.

Julian Salmon, of the Country Landowners Association, said: "The plot was lost a long time ago, probably in the first week. There was no sense of crisis management. The idea of it getting into fell flocks is a nightmare." The news was greeted as a disaster by tourism and park officials. The landscape of the Lake District, which generates a tourist industry worth £964 million, will suffer profound changes if the disease has reached the fells.

Farming and tourism in the area are inextricably linked and tourism accounts for one in four of jobs in the county. Oliver Maurice, the regional director of the National Trust, the area's biggest landowner, said: "The implications are absolutely catastrophic."

Chris Collier, chief executive of the Cumbria Tourist Board, said: "It's the worst thing that could happen. We will lose the fell for at least six months, which means we have lost the whole of this year. We are going to have to ask the Government to give businesses direct help, or they will not survive."

Cattle in Black Hall Farm at Seathwaite were confirmed to have the disease on Saturday after the farmer saw symptoms that morning. The farm's sheep, believed to be mainly Herdwicks, the Lake District's indigenous breed which is now threatened, are on the unfenced fells.

The cattle were awaiting slaughter yesterday and the sheep will be killed when they have been gathered from the fell. Because the fells are unfenced, the sheep will have had potential "dangerous contact" with others across the area if they are infected. There are now no obstacles to prevent the spread of the disease.

The farm is about 20 miles from any previous confirmed case. Hardknott and Wrynose Passes over the fells, across which the sheep roam, were closed The Ministry of Agriculture, was unable to say if or how far it might cull on the fells. Such a cull would mean the loss of "hefted" hill sheep, which have an inbred loyalty to their locality and are irreplaceable.

David Maclean, Conservative MP for Penrith and The Border, who has been demanding greater urgency since the crisis began, said: "I am so angry. If it is right to call the Army in now, why not weeks ago?" Lord Inglewood, a Tory Euro-MP who farms on the edge of the Lake District, said: "If the disease is in the Lakes, it is an environmental disaster. The reaction to this crisis has been Chamberlain, not Churchill."

The ministry announced that a former airfield in Cumbria would become the first site in the country for the mass slaughter of sheep. About 200,000 animals are due to be disposed of there, although the Army is licensed to bury up to 500,000 on the site.

In an attempt to be positive, Downing Street said the average time from the reporting of foot and mouth to slaughter in Cumbria was now below 24 hours. In Devon, more animals had been slaughtered in the past three days than during the rest of the outbreak.

Labour is anxious not to postpone the election and for the next seven days ministers will be working hard to persuade the public that the situation is under control. Mr Blair has set himself a deadline of a week today for his final decision. But there are signs that he is contemplating a poll in June. John Prescott, the Deputy Prime Minister, admitted in an interview: "There is divided opinion about when the election should take place. It seems to me to be a changing situation."